Is your cryptocurrency falling dramatically? Are you losing a lot of money? One option would be to buy more at a lower price, reducing your average down – but this is an extremely risky business. It is also known as ‘catching the knife’. Catch the handle and you’re on easy street aiming once more for the moon. Catch the blade and you’re going to continue bleeding until you have nothing left.
Communities of cryptocurrencies often see a fall in price as an opportunity. “Buy the dip” has become a common cryptocurrency phrase, although doing it well is another matter. With Bitcoin, there are many different trading experts and analysts who use different tools and often provide different results. Some are bullish, some bearish.
With smaller-cap altcoins, such analysis is much rarer, generally because not many people actually care. Their focus remains on the large-cap coins that are easier to predict through trends.
When small-cap coins begin to free fall, you may choose to buy cheaper coins, but in reality you’re essentially throwing money down the metaphorical drain.
Emotional attachment and delusion are two reasons as to why people choose to try and catch a knife that is falling at 100mph. The harsh lessons that are to be learned from bad decisions can be useful. Being rekt is without doubt something that will either make you or break you.
Whilst many traders argue that when people buy you should sell or vice versa, this is not applicable to 95% of cryptocurrencies that quite frankly don’t have a future. Until this is realised, there are going to be many more painful lessons and the industry as a whole is going to take years to advance.
The blind cult-like following that certain cryptocurrencies have has made believers out of people whose knowledge is lacking.
If you want to play the risky game of catching the knife, then be prepared to bleed and lose it all.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.